Last week was quite eventful in the “Workshop of the World”. Foxconn, a Chinese manufacturer for companies such as Apple, Dell and HP, gave a 20% ad hoc raise to its workers after as many as ten suicides which called into question the working conditions at its plants. Fox Conn employs 800,000 workers in 20 plants across China.

Then it was Honda’s turn. Workers in Honda’s four factories in China struck work bringing all production in China to a halt. Yesterday Honda gave a 24% raise to workers, who were still not happy.

The right to strike was excised from the Chinese constitution in 1982, and attempts by workers to organise outside the official All China Federation of Trade Unions are frowned on by Beijing.

Amenities at Chinese factories like Foxconn are actually considered to be good. From Guardian

Foxconn is proud of the fact that it provides a swimming pool and other facilities to its staff, as well as organising chess, calligraphy, mountain climbing and fishing.

At both companies pay is not great but is above the legal minimum wage. Many workers make much more by working overtime.

How is this, in any way connected with the Indian IT employees’ angst? They are both about employees having nowhere to go with their problems.

Even though their demands and managements’ responses have been focused on pay increases, Chinese employees taking on their managements, is not really about salaries. How can it be when most employees come from the hinterland where wages are poor, that is, when there are jobs available? It is because the workers feel powerless. They are lost in these huge organizations. Foxconn has 800,000 employees. Honda also employs a similar number across its four plants. The “official” trade union is not elected and is really part of the establishment – a proxy for management. The workers have nowhere to go with their problems.

Cut to the Indian IT Services industry. Most of the successful companies of today are very centralized in how they operate. Historically, this was necessary. To scale up they had to build an organization which ran efficient, repeatable processes. For that it was necessary to have strong central control. But the very thing that helped them scale engineering and business processes, made the middle management powerless and weakened the bonds between the company and employee. It failed at the most important aspect of scaling a company – in building a loyal, motivated workforce.

When a company is small, the founders or the members of the top management know everybody themselves or with one degree of separation. They infuse the whole company with their values. Employees form a relationship with the company based upon these shared values.

But as the company grows, one degree of separation becomes two, three, four and more. Pretty soon what top management gets to hear is what they hear from their direct reports. What they have to say is said to a select few or to the media. How do you continue to build trust with your employees? You can’t do it yourself. So you must have your middle managers become interlocutors for you.

The problem is that middle managers are so disenfranchised that they feel powerless. They are the ones who run the delivery teams, who make the company tick. But they don’t have the leeway to solve their own day-to-day problems. When they take their problems to their superiors they discover that they too are powerless. So they just keep punching the clock. If somebody in their team comes to them with a problem, they just say, “I can’t help it, that’s the way it is”. When the rank and file IT worker starts griping about the company, some of these managers stay silent. Others join the griping. Nobody defends the company. They can’t. They don’t believe in it themselves. That’s where the battle is being lost.

In the case of Chinese workers, establishing a union that is truly representative might actually be the solution. Empowering middle management is less effective. In manufacturing there is a “class divide” between managers and workers, often based upon education and qualifications. Very few workers will ever be promoted into management. So the “us vs them” feeling almost guarantees strife, especially if as in the case of Honda, the Japanese managers earn much, much higher salaries.

But in an IT Services company every engineer has the qualifications to become the CEO of the company. It should therefore be easier to bridge the divide. Also, regardless of the quantity of outpouring on the internet, it still does not represent widespread disaffection.

Winning back middle management is the first step in turning things around with employee relations. Stuffing their mouths with money just pushes out the day of reckoning.

11 Responses to IT Services Companies Should Empower Middle Management

Well said, Basab! The point about the feeling of 'powerlessness' is absolutely bang-on and how it leads to those conversations with rank-n-file where you cann't really defend the company because you have stopped believing too. Wonder whether it is to do with one or two specific IT services companies or a general malaise in th industry itself.

Arun – the companies that are more centralized in decision making will show these symptoms to a greater degree. But to a certain extent, all successful companies in the industry have gotten there by strong process orientation and financial controls.

But Basab, except for whining over the web, the middle managers have not been showing much spine either. How much of their clients' business they understand even after working with them for over months and years? If middle manager has to really stay relevant, they have to help transform clients' businesses with their unique insights and lasting solutions. Their nuanced understanding should overwhelm the client managements so much so that they insist on "Mr./Ms. XYZ" and not just any coder that fits the budget. That's how IT vendors can over-deliver on SLA. Instead if they just stop at writing codes and happy making once a year visit back to their Indian village to update their bank passbooks or to flaunt their American knickers, they're pretty much getting their fill don't deserve even the visa fee the vendors spend for shipping those bodies.

>> They are both about employees having nowhere to go with their problems.

I guess, this comparision is not correct

Firstly, HonHai's & Honda's problems are entirely different.
They have completely different brand equity. You may have to analyze the work practices of HonHai here. you need to see whether the overtime put in by the workers is anyway related to the look-alike gadgets, motherboards that make their way into the southasian markets. Then a different picture emerges.

Finally on the decentralization part, IMHO, it will automatically come if you tweak the ratios of your pyramid model that you discussed in earlier blogs. You just need to transform the DM/GPM from a postman like job to a post-master-general. And you dont need too many postmen anyway.

Next, it is untrue that Indian IT workers have "nowhere to go with their problems".
The talented always find their way. The churn speaks about that.

Your observation is applicable to some of those pot bellied, pointy head (no offence intended, pl.) Infosys/Wipro/TCS DMs/GPMs only. The fact is that, their immobility is not due to external forces. You have to apply Peter's principle here. It is just that they reached their level of incompetence.

Basab, As someone who had to toil to get multiple levels of approval and exception approvals and endure endless emails for things like reimbursing $40 taxi bills, being refused a spare laptop charger and things like that ( I can go on endlessly on this!), I heartily endorse the "empower the middle mgmt" mantra. When these mundane things become battles and larger things like employee retention or motivation are completely outside the ambit and subject to arbitrary diktats/"quotas"/bell curves, middle managers are truly squeezed. Not suggesting laissez faire, but you have to repose some trust and discretion on the middle manager.

In the 1990+ decade, morale in IT service companies was driven by stock markets. In the 2000+ decade, morale was driven by expansion and progression (until 2008).

Now, both factors settling down, industry is at cross roads. Everyone seems to be a victim. The problem really is that IT services industry had embraced too much of management in loss of software engineering. Some wise man thought more managers = more business! That backfired right?

DMs and above are mentally retired lott of people …they think in a different world all together ..In companies like Infosys the game of DMs and above is like a game of chess/complicated puzzle where they use all sorts of trickery/political mindset …. to puppeteer the people but at the sametime not to jeopardise their personal wealth / hapniess and comfort …..the people at the top thinks like Old India and wants the people at bottom to deliver like New India(read West) .